5333 Life Estates

Ownership interest in a property where a life interest has been conveyed is considered a countable asset for the owner according to the provisions of this section.

With a life estate, the holder retains the right to use the property during his or her lifetime, but actual ownership of the property is transferred to another person or persons. Establishing a life estate is essentially a means of limiting property ownership to a person’s lifetime. To assess the individual’s interest in the property, determine if the individual has a life interest or remainder interest in the property:

Life Interest - Also known as the owner of the life estate, or the life tenant, the person owning the life interest retains the right to use, occupy and receive the income from the property during his or her lifetime. This individual is assumed to be responsible for the mortgage, taxes and insurance on the property. A life interest can be established by transferring the underlying property and retaining a life estate on property the individual owned or by receiving a life interest in property in which another individual owned the underlying property. In both cases, the individual’s ownership is limited to the life interest. The value of the life interest is determined by the life tenant’s age.

Remainder Interest - Also known as the remainderman, the person owning the remainder interest does not have rights to possess the property until the life estate is terminated. Just as with a life tenant, the remainderman may have assumed the property through a transfer to him from property originally owned by another or by transferring a life interest to another in property he owned.